Cherry blossom and weapons of mass distraction

Starbucks, on the corner of H Street and 18th Street in Washington D.C, just across from the headquarters of the World Bank. Four cops, in baby blue shirts and slightly pervy 1930s-style leather accoutrements, order ice lattes. A kindly lady in a tent dress, probably a Quaker, sits with some young nose-ringed friends at a table nearby, their ‘Close Down the World Bank’ banners to one side. Under a Matisse-a-like in the corner, three unshaven photojournalists are sending images via their laptops to their media organisations.

All had piled in to Corporate Caffeine Central (also known as Starbucks, proud supporters of Earthday) after a second full day of demonstrations about the state of the world. Saturday, the previous day, had been anti-war day. Around 35,000 came out on the streets. And today, Sunday, was anti-World Bank/IMF day. Around 5,000, it's reported, marched. It was low key compared to previous events, although the police did smack a few people about a bit.

Buried deep in the International Monetary Fund (IMF) monolith, far away from the heart-wrenchingly beautiful sunshine and Washington’s famous cherry blossom – and oblivious to the demos – delegates to the World Bank and IMF spring meetings were assessing the state of the world’s economy, reviewing the inner workings of the institutions and plotting how to bring more aid to the world’s poorest countries in accord with the Millennium Development Goals.

But this semi-annual meeting of the World Bank and IMF earlier this month felt routine - a humdrum affair, marked by stalling and evasion, alongside a lot of talk about Iraq. Dramatic-Moments-in-World-Political-Economy this was not.

Globolog spent more time down in the windowless gloom than is good for anyone’s health (a brief foray around the capital, centre of the owned world, bombast in stone, a prolonged exercise in monumental, architectural flatulence; only the Vietnam Memorial is true to the human scale). The paragraphs below outline some of the key points that came up.

Photo credit: Larry Powell, from his book "Hunger of the Heart: Communion at the Wall."

The institutions – new governance

Before the meeting, the Bretton Woods Project, a leading critic of the World Bank and the IMF, said:

“A serious effort to improve Southern country voice at the institutions would require going far beyond capacity-building to change the composition, voting shares and transparency of the Bank/Fund Boards. Unless this is done many civil society groups will complain that this is just a typical donor exercise of throwing money at a problem rather than tackling the underlying issues.” Civil society groups circulated a statement with seven demands for reform, including rebalancing composition of the board and voting power (currently heavily skewed away from the poor countries most affected by their policies), making governing bodies transparent, opening leadership selection, and reversing the extension of World Bank/IMF mandates into areas covered by other UN agencies.

As predicted, the statement met largely with indifference by the Bank and the Fund. Even the limited concept of a fund to enhance the capacity of developing country governments to represent themselves was not approved. Nor was a proposal, supported by the South African and UK governments among others, to establish a consultative group of high-profile outsiders which could play a role in guiding a ‘re-invention’ of the Bank. “Without significant campaigning and pressure”, say the folks at Bretton Woods, “it is very unlikely that there will be any more progress to report by the annual meetings of the Bank and Fund in September”.

Civil society groups raised the same issues at a meeting with the United Nations Economic and Social Council (Ecosoc) in New York on the days immediately after the Washington meeting. The World Bank, IMF and the World Trade Organisation (WTO) are required to report to Ecosoc, but the latter has no actual powers.

As the UN develops its relations with civil society groups as part of a programme to increase its legitimacy over coming months, it will be interesting to see whether the status and ‘bite’ of Ecosoc increases in any way. It already carries a heavy burden that may make decisiveness hard. A list of NGOs worldwide with consultative status to Ecosoc runs to 63 pages. By Globolog‘s estimate that’s more than 1,800 NGOs. But the very size and diversity of this constituency – albeit of groups that are mostly not democratic in the conventional sense – should, some argue, give it some moral authority when the NGOs and Ecosoc reach an accord.

Debt: time to forgive?

“It’s a strange feeling to wake up and find George Bush in your bed.” The speaker is Jurgen Kaiser of Erlassjahr, the German campaign for relief of the debts of the world’s poorest countries. That morning (11 April, the day before the Bank/IMF meeting kicked off), a few days after the fall of Baghdad, George Bush had called for forgiveness of Iraq’s debts. No country, he said, should be burdened by the debt incurred by evil dictators.

This is precisely what we have been saying for years, said campaigners for debate forgiveness of the world’s poorest countries. The US should apply the same logic to other nations suffering even worse conditions than Iraq.

“It’s clearly self-serving,” said Soren Ambrose of 50 Years is Enough. “The US government has steadfastly opposed cancelling debts in the rest of the world even in cases as egregious as the apartheid government’s debts in South Africa and Mobutu’s debts in Zaire (known now as Congo)”.

One of the proposals for dealing with the problems facing the very poorest countries was the Sovereign Debt Reduction Mechanism. This had already been pronounced dead before the spring meeting. According to sources that spoke to the Guardian’s Larry Elliott, the reason was that the Bush administration had been lobbied by the US financial sector, which had profited from the bail-out packages that have been hastily arranged over the past decade to help countries through periods of crisis. According to one source there was enormous resistance from the banks to any measures that would put an end to 'welfare on Wall Street'.

Instead, US Treasury Secretary John Snow said America would back collective-action clauses (CACs). These would prevent minority creditors from holding out for a full settlement of their debts when other countries are seeking to organise a writedown. It looks to Globolog as if the CACs would ensure that, in cases where the US had a significant interest, it would always retain control without having to consult with others.

As for forgiving Iraq’s debts, the issue continues to be debated. Groups like Jubilee Iraq continue to campaign, while others argue strongly against.

International Finance Facility

There is genuine commitment in the World Bank, and among many who support it, to deliver real progress and justice for the world’s poorest people. The Bank’s Development Committee is intended to play a key role here. One of its key roles at the semi-annual meetings is to report on progress towards achieving the Millennium Development Goals (MDG) for reducing world poverty, and whether sufficient resources are being applied to meet them.

Despite preoccupation with the Iraqi war (likely to cost more than the MDGs for the world’s poorest two billion people), there was some hope at the spring meeting that things could move in the right direction here.

A mantra at the meeting was the need to get the Doha trade round back on track. The accepted wisdom is that a more level international playing field – especially in agriculture – could do more than almost anything else to better the lot of the poor (“What?” said a hardboiled local journalist, winking, “those are our Freedom Crops – they’re not subsidies, they’re Patriot Payments!”). Whether or not this is the whole truth is open to question. Globolog will come back to it another time.

And the good news in Washington was that a proposal for an International Finance Facility, which would double aid flows from the rich countries to the developing world from $50 billion to $100 billion, was not pronounced dead (although it may yet be nailed to its perch). Gordon Brown, Britain’s chancellor (treasury minister) and second most powerful man in the British government, won the agreement over that weekend of both the Group of Seven leading industrialised countries and the International Monetary Fund to look at the proposal.

The idea is to raise money by selling bonds backed by rich-country governments, with the capital repaid out of future aid flows in twenty or thirty years. (For more details see here).

Britain’s Treasury is confident that a workable plan will be available by early June, when (in Evian) Jacques Chirac hosts the annual summit of the G8 (the group of seven large rich industrial country governments, plus Russia – and, this year, China, making it a G9).

France is the one G7 country to give Brown’s proposal wholehearted support. But there is concern in London that George Bush will not wish to give Jacques Chirac a triumph at the summit and would not be prepared to ask Congress for more money at a time when the White House has just requested $80 billion to fight the war in Iraq.

Given domestic budgetary pressures and an ideology locked and frozen, it is hard to see the US administration making even a modest increase in development assistance to poor countries (although a recent increase in US support for initiatives such as those on conflict diamonds is welcome). That the US – as largest and (except for Luxembourg and Switzerland) richest nation and the largest absolute giver, but one of the very smallest as a percentage of national income – comes twentieth out of twenty-one rich industrial nations in a new Commitment to Development Index (CDI) is unlikely to melt administration hearts. The CDI – a measure that takes into account aid, trade, immigration, investment, peacekeeping and whether environmental policies help or hurt poor countries – is launched on 29 April, the day this Globolog goes online.

Weapons of Mass Distraction

The term headlining this section features in a British Cliché Watch of the Week. There’s a good reason it’s there. The Bush administration and its allies will do everything possible to divert attention from helping the world’s poorest people abroad. At home, they will calculate, the Lumpenproletariat and the middle class can largely be kept quiet by dosing them full of sugar and Fox TV, New Rome's panem et circenses.

And if the voters start to wake up, there will be no shortage of other compelling issues to grab their attention. For example, rebuilding Iraq could prove to be even more bumpy than predicted, both in the short term and in the longer run (even in the most favourable circumstances, building an economy on oil is a dicey proposition – a matter Globolog will return to). Further, pressure in the US to do something about ‘meddling’ Iran, before it goes nuclear in (if Amir Taheri is to be believed) about 2005, will be strong.

But, just as nobody ever lost money by underestimating the taste of the American public, so nobody ever lost a US presidential election by overestimating the importance of domestic issues.

The Bush team is reported to have $200m war chest for the 2004 campaign — twice the amount of the 2000 campaign. That's a record amount for a presidential candidate, and especially remarkable because Mr Bush faces no serious opposition for his party’s nomination.

Underestimating Bush (Rove) has been a chronic mistake on the left. The sooner the Democrats bury their hatchets (settling up on divisive issues in foreign affairs such as the Iraq war), the more chance they will have to build a winning platform.

Leading contenders for the Democratic nomination such as John Kerry and John Edwards need to work out a way of saving most of their ammunition for the opposing party, and fast, if they are to win. The fate of the domestic economy – where Bush’s tax cuts add up to what Paul Krugman memorably terms a ‘WPA in reverse’ (see the 22 April column ‘Jobs, Jobs, Jobs, in his archive) – should give them something to work with.